Expect More ETF Investment in Next 6 Months: etf.com Survey
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Both retail investors and financial advisors plan to invest in more exchange-traded funds in the next six months, according to the ETF Report: Global Investor Survey. Over 55% of retail investors plan to invest in more ETFs, compared to the nearly 66% of financial advisors that intend to increase their ETF exposure.
This year stands to be a record-breaking year for ETFs as the industry is on track to break more than $1 trillion in inflows. Year to date, ETFs have pulled in more $810 billion. Vanguard's 500 Index Fund (VOO) topped October inflows, pulling in $14.5 billion in the month. According to the etf.com Pulse Tool, the fund has raked in over $86 billion this year so far.
Equity ETFs Remain King
But increasing ETF interest isn't the only similarity between advisors and investors when it comes to their investing decisions. Equity ETFs still clinch the top spot among all asset classes for future investment, according to the survey.
Over 43% of retail investors say they invested in more equity ETFs over the past six months, while 47% surveyed plan to buy more of the asset class in the future, indicating increasing interest in equity funds going forward. Advisors expressed similar interest to the asset class, with 41% of advisors buying more of the fund type in the six months before the survey period (Aug. 15 to Oct. 1). Going forward, advisor interest in equities dips to 38%, perhaps driven by recession fears, advisors' top concern in the future.
When looking at year-to-date inflows among all ETFs, equity funds make up 60% of the top inflows.
But fixed income could unseat core equities; 15% of financial advisors are bullish about the category, the second most popular after equities. The increased interest in fixed income comes as the Federal Reserve has begun a campaign of cutting interest rates.
Advisors Like Actively Managed ETFs
This year's report focused on active management—the deep dive coming as advisors express increased interest in this fund category. More than half all advisors surveyed have expressed some level of interest in increasing exposure to actively managed ETFs in the next six months.
Advisors surveyed said they would like active ETFs to represent roughly 30% of client portfolios. The allocation is second only to the 46% holdings advisors indicate they would want allocated to index ETFs.
On mutual funds, advisors preferred active mutual funds to passive, 18% to 10%.
For further insights and to read the Global Investor Survey, click here.